Paycheck Checkup May be Needed

The Tax Cuts and Jobs Act made significant changes to the tax law, including increasing the standard deduction, eliminating personal exemptions, increasing the child care tax credit, limiting or discontinuing certain deductions and changing the tax rates and brackets.  While these changes did not affect the 2017 tax returns they will affect the 2018 tax returns filed next year.  For this reason the IRS is continuing to push a “paycheck checkup” for all employees but especially seasonal or part-time employees. To assist employees the IRS unveiled several new features to help people navigate the issues affecting withholding in their paychecks. The effort includes a new series of plain language Tax Tips, a YouTube video series and other special efforts to help people understand the importance of checking their withholding as soon as possible including a withholding calculator.

Employees can use the Withholding Calculator to estimate their 2018 income tax. The Withholding Calculator compares that estimate to the employee’s current tax withholding and can help them decide if they need to change their withholding with their employer.  When using the calculator, it’s helpful to have a completed 2017 tax return available. Employees who need to adjust their withholding will need to submit a new Form W-4, Employee’s Withholding Allowance Certificate, to their employer. If an employee needs to adjust their withholding, doing so as quickly as possible means there’s more time for tax withholding to take place evenly during the rest of the year. But waiting until later in the year means there are fewer pay periods to make the tax changes – which could have a bigger impact on each paycheck.

Among the groups who should check their withholding are:

  • Two-income families.
  • People working two or more jobs or who only work for part of the year.
  • People with children who claim credits such as the Child Tax Credit.
  • People with older dependents, including children age 17 or older.
  • People who itemized deductions in 2017.
  • People with high incomes and more complex tax returns.
  • People with large tax refunds or large tax bills for 2017.

FBI Warns of Another Phishing Scam Against Employees

The FBI is now warning employers of a possible phishing scam taking place.  This one targets the employees themselves. It focuses on companies that use self-service platforms where employees can view their pay, get duplicates of W-2s and update direct deposit information.  The fraudsters are impersonating the employer’s human resources department and asking employees to update or confirm their personal information via a fake website.  The employee receives a fake email that asks the employee to click on the link provided to log into his self-service account.  The email asks the employee to logon to view a private email from HR, to view changes that have been made to their account, or to confirm that the account is still active.

By clicking on the link and entering their self-service credentials, the employee is actually giving their logon information to the fraudster. The fraudster than can go into the self-service account himself and access all of the information including W-2 and pay stub info.  He can also change the direct deposit information. In order to prevent the victim from from knowing what is going on, the fraudster will also change the email address that the self-service platform uses to send alerts when changes are made.

Payroll and human resources professionals need to be on the lookout for this type of email.  With the new tax bill causing new tax withholding decisions, many employees are making good use of these types of self-service portals.  This will be especially true when the new Form W-4 is issued by the IRS.  Employees will want to make sure they have the proper withholding under the new tax tables.  And it would not be “unusual” for payroll or HR to send out emails during this time-frame.

It is also imperative to practice what the FBI calls “good email hygiene”.  Train your employees to watch for phishing attacks and to also check the actual email address rather than just looking at the display name.  Both these items can be crucial to seeing the attack early, before the damage is done.

GA 2015 Employer Guide Now Available

The Georgia Department of Revenue has updated the Employer’s Tax Guide, which contains information regarding personal income withholding tax filing requirements based on the tax law as of January 1, 2015. The withholding tables have not been changed. Don’t be concerned if you go to their website and still see it listed as 2014.  They updated the Guide but not the website!

MI Has a New System but No New Tables

In January 2015, the Michigan Department of Treasury began to process current year SUW tax returns with a new online system.  As a result of this new processing system, there will be changes to the SUW forms and to the way taxpayers can file and make payments for returns in tax year 2015 and beyond. The new bundle of e-services is called Michigan Treasury Online (MTO). Business taxpayers have 24/7 access to their accounts and will be able to file returns electronically, pay SUW tax due in one convenient transaction and make routine account changes.

However, although the income tax withholding rate remains at 4.25% for tax year 2015 but the personal exemption amount changed to $4,000, employers should continue to use the 2014 Michigan income Tax Withholding Tables

OR Withholding Changes

The Oregon Department of Revenue has released the wage-bracket withholding tables.  These updated tables reflect the increased federal tax subtraction to $6,450 and other changes to indexed items. If employees need help in making sure proper amount of tax is withheld they may use Department Publication 150-206-643, Oregon Income Tax Withholding.

2015 Publications and Forms

I am still catching up from my vacation over the holidays.  The IRS has released the following publications for 2015:

  • Publication 15, The Circular E. It is now available on the IRS website.   http://www.irs.gov/pub/irs-pdf/p15.pdf
  • Publication 15-B, Employer’s Tax Guide to Fringe Benefits  http://www.irs.gov/pub/irs-pdf/p15b.pdf
  • Publication 51, Circular A, Agricultural Employers Tax Guide  http://www.irs.gov/pub/irs-pdf/p51.pdf
  • Publication 80, Circular SS Federal Tax Guide for Employers in the U.S. Virgin Islands, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands http://www.irs.gov/pub/irs-pdf/p80.pdf

In addition, the IRS has also released the 2015 Form W-4 http://www.irs.gov/pub/irs-pdf/fw4.pdf

Monday Round-Up to Catch Up

I have returned from my holiday/vacation and am back at my desk.  So I decided to have one round-up of the news today to catch up while I was gone and then one again on Friday to catch this week’s news.  So here is the round-up since I left on December 23rd.  There are a few exceptional items to note.  New York is eliminating the annual notice requirement, Illinois is moving up the due date for Forms W-2 for electronic filers and North Carolina is adding a new NC-4 form for nonresident aliens.

Arkansas: 2015 SUI wage base remains $12,000.

Connecticut: Department of Revenue has released the 2015 withholding calculation rules and tables.

District of Columbia: the Office of Tax and Revenue has released the Draft, Version 2, of the Income Tax Withholding Instructions and Tables for 2015 FR-230

Hawaii: The Department of Taxation has announced that it has adopted the federal standard mileage rates for 2015.

Hawaii: 2015 SUI wage base is $40,900.

Idaho: 2015 SUI wage base is $36,000.

Illinois: Department of Revenue has announced that as a result of an emergency rule filed on December 22, 2014, and effective with the 2014 tax year, employers required to file their Forms W-2 electronically must do so by February 15th not by March 31st as previously required.

Massachusetts: The Department Revenue has finalized the 2015 monthly transportation fringe benefits. They will follow the federal amounts of $250 for parking and $130 for transit passes/commuter highway vehicle.

Minnesota: The Department of Revenue has announced it has revised REV184, Power of Attorney. The Department will no longer accept the old version of the form. It has also eliminated Form REV184a.

Missouri: 2015 withholding tables now available

Montana: The SUI taxable wage base for 2015 is $29,500

New Mexico: The Taxation and Revenue Department has released the 2015 wage-bracket and percentage method tables.

New York: The state has eliminated the annual notice requirement that requires employers to notify and receive written acknowledgment from every worker regarding rate of pay, allowances, pay day, etc. Law also expanded various protections enacted in 2014 but still some technical details for legislature to work out.

North Carolina: Due to recent legislative changes the state has released a new Form NC-4 NRA, Nonresident Alien Employee’s Withholding Allowance Certificate. It must be used in 2015 in lieu of the NC-4 or NC-4EZ.

North Carolina: Supplemental withholding rate for 2015 is 5.75%. This is down from 5.8% for 2014.

North Dakota: The Tax Department has released the 2015 withholding tables

Vermont: The Department of Taxes has released its state income tax withholding tables for 2015.

Wyoming: SUI wage base for 2015 will increase to $24,700.

Our roundups will resume as per our usual schedule as of this Friday, January 9th.

Friday is Round-Up Date 11-21-14

Here is our Friday round-up:

IRS: The IRS has issued clarification to the instructions for correcting taxable wages and tips subject to Additional Medicare Tax Withholding on line 11 of the Form 941-X.

Federal Child Support: Recently signed legislation requires that all states offer the option of receiving the child support withholding order electronically. The deadline to have the service set up is October 15, 2015. Currently over 30 states already offer this feature. See our blog of 11-18-14 for more details.

California: The DLSE has released the minimum wage rates that computer software employees and physicians and surgeons must receive to be considered exempt for 2015. The computer software employee’s minimum hourly rate of pay will be $41.27. This is up from $40.38 for 2014. The monthly salary will be $7,165.12 and the annual salary will be $85,981.40. The physician and surgeon’s minimum hourly rate will be $75.19 per hour. This is up from the rate of $73.57 per hour effective in 2014.

California Part 2: The state has released its 2015 meals and lodging ratesca 2015 meals

Colorado: The minimum wage effective 1-1-15 will be $8.23 per hour. Tipped employees must receive $5.21 per hour. Wage Order Number 31 must be posted.

Maine: The SUI taxable wage base will remain $12,000 for 2015.

New Hampshire: The state is the latest that has signed a Memorandum of Understanding (MOU) with the federal Department of Labor to share and coordinate enforcement efforts in the area of misclassifying workers as independent contractors. So far 17 states have signed MOUs and agreed to work with the federal DOL to curb misclassification of employees.

New Jersey: Form W-2 and 1099 reporting guidelines for 2014 are now available.

New Jersey Part 2:

The Department of Labor and Workforce Development has released the calendar year 2015 employee TDI/FLI and SUI withholding rates. The wage base for 2015 is $32,000. The other taxes are as follows:

  • Temporary Disability Insurance (TDI): employee rate will decrease to 0.25%. The maximum employee contribution will be $80.00
  • Family Leave Insurance (FLI): the employee rate will decrease to 0.09%. The maximum employee contribution will be $28.80
  • State Unemployment Insurance (SUI): The employee rate will remain 0.425%. This includes the Workforce Development/Supplemental Workforce Funds surcharges. The maximum employee contribution will be $136.00.

nj emploeetdi

Ohio: the employer and school district withholding tax filing and payment requirements have changed, effective January 1, 2015. The change occurred on November 13, 2014. Employers are now required to file and remit payment for state and school district income tax withholding returns electronically using the Ohio Business Gateway. This requirement applies to all withholding tax returns that are filed and paid on or after January 1, 2015.

That’s our round-up for this week. We will have another round-up next Friday. To receive the news items as they happen follow us on Twitter, Facebook or LinkedIn.